The Stanford Marshmallow Test, conducted by researcher Walter Mischel in the late 1960s, found that children who could delay immediate gratification — by waiting to eat a marshmallow placed before them — tended to achieve better outcomes later in life.
The lesson? Sacrificing short-term indulgences can lead to bigger rewards in the future. This principle applies directly to personal finance: small daily decisions around spending, saving and investing can compound into substantial long-term wealth.
1. Pay yourself first
When building long-term wealth, “paying yourself first” is a proven strategy. You essentially treat your savings and investments like any other monthly bill. As soon as you receive income — whether from a paycheck, side hustle or freelance work — set aside a portion before paying other expenses.
How it helps:
- Builds consistent savings: By making your savings contributions automatic, you avoid the temptation to spend extra cash on discretionary items.
- Promotes discipline: You start to develop a wealth-building mindset when you prioritize your financial goals before anything else.
You can pay yourself first by scheduling an automatic transfer into a high-yield savings account or investment account on payday. This small shift turns saving from an afterthought into a non-negotiable monthly habit.
2. Create and stick to a budgeting plan
One of the most fundamental wealth-building habits is creating a budget that tracks where each dollar goes. This isn’t just expense tracking; it’s proactively deciding how to use your money to meet specific goals. A solid budget helps you spot spending leaks, reduce waste and free up more funds for saving or investing.
How to get started:
- Set clear financial goals: Maybe you want to buy a home, pay off debt or simply save more for retirement. Write these down so you know what you’re working toward — that goal can be pretty motivating.
- Track your expenses: Document every expense for at least one month. Compare it to your income to see where your money really goes.
- Allocate your income: Once you see your spending patterns, assign specific amounts to essentials (housing, groceries, utilities), debt repayment and savings.
3. Build and maintain an emergency fund
Unexpected expenses happen to everyone, and can quickly derail your finances if you’re unprepared. According to Bankrate’s recent survey, only 41 percent of U.S. adults would use the money in their savings to cover an unexpected $1,000 expense.
By setting up an emergency fund, ideally three to six months’ worth of basic living expenses, you protect yourself from taking on high-interest debt when surprises occur.
Key reasons to have an emergency fund:
- Reduces stress: Having a financial cushion can help you handle crises more calmly.
- Protects your credit: Avoiding credit card debt helps preserve a healthy credit score.
Keep your emergency fund in a separate high-yield savings account — accessible but not too easy to tap for non-emergencies. Once established, you can focus on long-term investments to continue growing your wealth.
4. Minimize debts with high interest
High-interest debt, especially credit card balances, can significantly hinder wealth-building. The more you spend on interest payments, the less you can allocate toward savings and investments. An early step in your wealth-building journey should be to either pay off or refinance high-interest debt as quickly as possible.
Strategies to reduce high-interest debt:
- Debt snowball method: Pay down your smallest balances first, then roll those payments into larger balances.
- Debt avalanche method: Tackle the highest-interest debts first to minimize total interest paid over time.
- Balance transfers or refinancing: Explore options like balance transfer credit cards with lower introductory rates or refinancing loans to lower APRs.
Bankrate’s debt management calculators offer additional guidance on creating an actionable debt reduction plan. Freeing yourself from high-interest debt not only improves your monthly cash flow but also accelerates your path to wealth.
5. Invest for the long haul
Saving is crucial, but investing is where your money truly grows. Thanks to compound interest, even small investments can multiply over time. That said, choosing the right investment strategy can feel overwhelming. Focus on a long-term, diversified approach that matches your risk tolerance and financial goals.
Types of long-term investments:
- 401(k) and IRAs: Tax-advantaged retirement accounts offering compounding returns.
- Index funds or ETFs: Offer diversification with typically lower fees than actively managed mutual funds.
- Brokerage accounts: Provide flexibility to invest in stocks, real estate investment trusts (REITs), bonds and more.
A long-term focus reduces the impact of market volatility and short-term economic fluctuations. If you’re new to investing, start by learning the basics or consulting a financial advisor for personalized guidance.
6. Automate your finances
An efficient way to maintain wealth-building habits is to put them on autopilot. Once you’ve established your budget, savings goals and investment accounts, use automation tools like robo-advisors wherever possible. Many financial institutions allow you to schedule recurring transfers so you never miss a contribution.
What you can automate:
- Savings contributions: Move a portion of every paycheck into your emergency fund or long-term savings.
- Retirement contributions: Automatically invest a percentage of your salary in a 401(k) or IRA.
- Bill payments: Prevent late fees or hits to your credit score by scheduling autopay for recurring bills.
Automation ensures consistency in your wealth-building plan and removes emotional temptations to skip saving or investing. Once set up, your money quietly works to grow your long-term wealth in the background.
7. Continuously increase your earning potential
Growing wealth isn’t only about saving or investing; it also involves earning more over time. Whether through career advancement, side hustles or salary negotiation, increasing your income can significantly accelerate financial progress. The average side hustler earns about $891 per month in extra income.
Ideas to boost your income:
- Freelance or consult: Turn existing skills into extra income through platforms like Upwork or Fiverr.
- Part-time gig: You could consider driving for a rideshare service or selling handcrafted goods online.
- Negotiate raises: Regularly assess your market value, document your achievements and ask for appropriate compensation.
Even modest income increases can dramatically impact long-term wealth when directed toward savings or investments.
8. Practice mindful spending
Mindful spending isn’t about depriving yourself of everything you enjoy — it’s about aligning purchases with your values and goals. By evaluating whether expenses truly enhance your life, you can avoid wasteful spending and allocate more money toward wealth-building.
Tips for more mindful spending:
- Create a cooling-off period: Wait at least 24 hours before making large purchases to avoid impulsive shopping.
- Track discretionary expenses: Use a spending tracker or budgeting app to ensure your spending aligns with your priorities.
- Adopt values-based budgeting: Prioritize spending on what genuinely matters — like experiences, education or health — over mindless purchases.
This approach helps redirect more resources toward investing and saving as you build good money habits.
Bottom line
Building long-term wealth doesn’t require a massive income; it’s about developing consistent habits that align with your financial goals.
The key is to start now. These habits may seem simple, but consistency drives success over time. Consider implementing just one strategy — like automating your savings — today. As you gain momentum, you can incorporate additional approaches and watch your finances grow.
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